for those that keep forgetting, page-2

Here is something else for you Mac and doubters to read about:



Plans to triple south africa’s uraniumProduction by 2010
eal Froneman, CEO of Aflease, which is soon to be
reverse listed into Canadian junior Southern Cross and to be renamed sxrUraniumOne, has been expressing his confidence in this commodity for over a year
and he says that, if anything, the fundamentals for the metal are even clearer than they were before.
“Demand is constantly outstripping supply and this situation will not ease for the next five to ten years,”
he says.

At the moment the Nuclear Fuel Corporation of South Africa (Nufcor) calcining facility in the West Wits area produces some two million pounds a year of uranium
oxide. The facility’s input comes from AngloGold Ashanti operations, that company being South Africa’s
only producer of uranium. Aflease/ Southern Cross is looking to
increase the country’s profile as a major uranium producer by adding four million pounds of U3O8 a year
by 2010. Other uranium producers in Africa are Namibia’s Rossing mine and Cogema in Niger. French
company Cogema is the world’s largest producer of uranium and it is projected to produce 22% of
the world’s total mined uranium in 2010.

Froneman’s projections for 2010 see Canadian company Cameco holding on to number two spot at
19% followed by ERA at 12% and a trio of Russian and former USSR producers with a combined 24%.
WMC of Australia is projected to produce 8% of the world total from its Olympic Dam mine, and
Rossing will produce 7% of the world total. sxrUraniumOne will produce a projected 5% of the
world total, eclipsing AngloGold Ashanti which
will produce 3% of the world’s mined uranium in
2010 as a by-product of its gold mining operations in
South Africa.

Froneman says that sxrUraniumOne will have assets in South Africa, Australia and Canada. Its Dominion
project in South Africa is the most advanced and this comes from Aflease, while the Southern Cross
Resources uranium properties in North America and Australia provide geographic diversification
and a pipeline of projects. The project in Canada is the Pitchstone joint venture located in the prolific
Athabasca basin of Saskatchewan.

That region hosts some of the largest and highest grade uranium deposits in the world. In Australia
the Honeymoon deposit has been permitted, which is significant as that country has an ‘only three
mine’ rule whereby it only allows production of uranium from three sites at any one time. Honeymoon
can produce 880,000 pounds of U3O8 a year and with a construction capex of US$24.6 million would
have a start up time of less than 18 months after go-ahead is given. sxrUraniumOne will have a market
capitalisation of about US$500 million and code compliant uranium resources in South Africa
of 120 million pounds, and another 20 million pounds on its offshore properties. The company also has
resources of 7 million ounces of gold, of which some
1.4 million ounces are in the reserve category.
“Aflease specialises in shallow
low risk low cost mines. We
did an exercise that identified
three projects which could be
developed,” Froneman says.
One of those is the Bonanza South
project, a gold project that will
produce 30,000 ounces of gold a
year and has poured its first gold.
The other is the company’s Modder
East property where Froneman
sees the potential for consolidation
of gold production on the East
Neil Froneman.
View of the Aflease Bonzana South plant, which is adjacent to the Dominion project.
SOUTH AFRICA
MINING REVIEW AFRICA – ISSUE 6 2005
39
Rand. The third is the Dominion
uranium project where construction
is underway concurrently with
capital raising.
“It is important to establish a
position in the upcoming uranium
market early,” Froneman says. “For
that reason delivering uranium to
the market by early 2007 is critical.
The traditional project approaches
will not meet these strategic
objects, and that is why we are
undertaking a parallel stream of
work including a mine plan of
sufficient accuracy to warrant
funding and an implementation
plan complete with sufficient
detail to allow procurement and
construction the moment permitting
allows.”
From an exploration viewpoint
Dominion’s main aim is now to
upgrade resources to reserves
for mining. An 11,000 metre
drilling programme is underway to
delineate reserves for production
and Dominion is expected to have
a life of mine of over 30 years.
“Dominion has the advantage that
it is not a greenfields project and
the orebody is well understood. It
was studied by Anglo prior to 2003.
A lot of testwork has been done,”
Froneman says.
That helps place sxrUraniumOne
in a position to bid for market
leadership as a global uranium
producer. Another advantage it has
over other groups is that South
Africa has a responsible though
friendly mining and environmental
code, compared with other parts of
the world where attempts to mine
uranium can be a sticking point.
For the phase 1 of the Dominion
mine it will focus on reserves no
deeper than 500 metres. The
orebody features multiple reefs, the
channel width will be 30 cm and the
mining will be done using 1 metre
high stopes.
Site clearing work is underway and
earthworks and civils will start in
due course. It has also ordered
the longer lead time items, while
the process engineering is being
done by Bateman. The shaft
sinking and development work
will be done in-house and decline
development was scheduled to
start in November 2005. The
current production plan is for some
2 million pounds of U3O8 production
in 2007, with this increasing to
2.8 million pounds in 2008 and
3.5 million pounds in 2009 and
4 million pounds in 2010.
The project has a low capital
cost of US$112 million. Aflease
will strive for a 60/40 debt equity
funding ratio and of the equity the
first US$20 million has been raised.
The company will go to the market
to raise the remainder of its equity
funding in about February 2006.
The US$75 million debt finance
will be raised in the first half of
2006 following the completion of
a detailed feasibility study in April
2006.
Froneman says that 60% of the
capex requirement will be for the
metallurgical plant. The plant will
comprise crushing and milling,
followed by an acid pressure leach
in an autoclave. The solids are
neutralised and report to a cyanide
gold extraction
circuit. Solvent
extraction using
pulse columns
is then used on
the uranium. The
gold circuit is the
same plant as
that being used
by the adjacent
Bonanza South
operation.
With gold credits
of about 90,000
ounces a year,
and potentially
rare earth credits
Dominion will
produce U3O8
at cash costs of
below US$16/
pound.
Bonanza South,
which has come
on stream on
schedule, is in
effect a pilot
project for the
larger Dominion
project. “The
orebody is
the same, the
MRA
method for accessing it is the
same, so in Bonanza South we
have a good test case,” Froneman
says. “Interestingly Bonanza South
has uranium by-product credits,
the reverse of Dominion which has
gold by-product credits.”
Bonanza South will have a life of
mine of some four to five years.
Froneman says that while the gold
market is hard to read, he is much
more confident about the uranium
market, and hence believes
developing a project in this area is
a lower risk.
Aflease will merge its gold assets
into Sub Nigel, these assets being
worth an estimated R450 million
(US$69 million). The company
plans to increase its dominance in
uranium in South Africa through
the acquisition of additional
uranium assets. It also will take the
Honeymoon project in Australia
to detailed feasibility level, while
completing its reverse listing into
Southern Cross.